Have you been served with a statutory demand? Do you need to serve one on a debtor?
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12 April, 2018 | Duncan Lang
Once the Debtor Company has been served with a Statutory Demand, it then has a period of 15 working days to pay the debt or otherwise satisfy the demand (or make a formal dispute to the Court). If the debt is not paid, or a formal dispute of the debt lodged with the Court, then an act of insolvency as been established, which then provides the creditor with the ability to file an application in the High Court to wind up the Debtor Company (the District Court does not have the jurisdiction to deal with these applications).
Often, serving a Statutory Demand is a very effective way of motivating a Debtor Company to focus on the issue and can be a very effective procedure to achieve payment.
Before issuing a statutory demand, it is extremely important to consider the following:
If there is a substantial dispute over the debt or the amount owed to you, then serving a Statutory Demand is not the appropriate course of action and is considered to be an abuse of the court process for winding up a Company.
The High Court recommends that a Statutory Demand be issued by a firm of solicitors to ensure that this procedure is not used inappropriately.
In the event that there is a substantial dispute with the Debtor Company, it would be a more appropriate course of action to determine the dispute in the ordinary course by issuing legal proceedings in the District Court or the Disputes Tribunal.
Often, the service of a Statutory Demand results in the Debtor Company taking prompt action to satisfy the demand in order to avoid being wound up.
20 March, 2012 | Duncan Lang
14 November, 2014 | Duncan Lang